Pre-opening Comments for Thursday September 22nd
U.S. equity index futures at 7:30 AM EDT were lower this morning. S&P 500 futures were down 12 points in pre-opening trade.
The Bank of England raised its lending rate to major banks from 1.75% to 2.25%.
Lennar added $0.55 to $76.47 after reporting higher than consensus fiscal third quarter revenues. The company also raised guidance for the fourth quarter.
![clip_image001[1]](https://timingthemarket.ca/techtalk/wp-content/uploads/2022/09/clip_image0011-11.png "clip_image001[1]")
KB Homes slipped $0.23 to $27.79 after reporting less than consensus fiscal third quarter revenues.
![clip_image002[1]](https://timingthemarket.ca/techtalk/wp-content/uploads/2022/09/clip_image0021-14.png "clip_image002[1]")
Salesforce.com gained $2.62 to $150.25 after announcing a long term plan to increase operating margins.
![clip_image003[1]](https://timingthemarket.ca/techtalk/wp-content/uploads/2022/09/clip_image0031-9.png "clip_image003[1]")
EquityClock’s Daily Comment
Headline reads “The path of the S&P 500 Index is still tracking well with the performance seen in 1962, a year that also realized a drawdown of over 20% through the first half of the year”.
http://www.equityclock.com/2022/09/21/stock-market-outlook-for-september-22-2022/
Responses to the FOMC meeting release at 2:00 PM EDT
As expected, the FOMC raised the Fed Fund rate by 0.75% to a 3.00%-3.25% range. Unexpectedly, the FOMC raised guidance on the future Fed Fund from 3.40% to 4.4% by the end of 2022 and further increases in 2023.
Responses were volatile: Initially, the S&P 500 Index moved sharply lower, then sharply higher and finally sharply lower.
The U.S. Dollar ETN also initially moved higher, then lower and finally higher
Long term bond prices and related ETFs moved sharply higher.
U.S. Money Center equities and related ETFs initially moved lower, moved sharply higher and closed sharply lower.
Gold and silver bullion and related equities moved higher but sold off in late trading.
Technical Notes for yesterday
Germany iShares EWG moved below $21.08 extending an intermediate downtrend.
Frontier iShares $FM moved below $26.09 extending an intermediate downtrend.
NASDAQ Biotech $IBB moved below $119.31 setting an intermediate downtrend.
S&P 100 stocks breaking intermediate support in late trade: McDonald’s $MCD moved below $251.20 completing a Head & Shoulders pattern. Simon Properties $SPG moved below $97.08 setting an intermediate downtrend. US Bancorp $USB moved below $44.35 extending an intermediate downtrend. Abbott Labs $ABT moved below $100.73 extending an intermediate downtrend.
NASDAQ 100 stocks breaking intermediate support in late trade: Electronic Arts $EA moved below $119.36 extending an intermediate downtrend. Align Technology $ALGN moved below $225.86 extending an intermediate downtrend. Fiserve $FISV stock moved below $100.64 extending an intermediate downtrend.
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for September 21st 2022
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for September 21st 2022
Green: Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for September 21st 2021
Green: Increase from previous day
Red: Decrease from previous day
CATA Meeting Tonight
Speaker at the meeting this evening at 8:00 PM EDT is Jeff Parent, past president of the Canadian Society of Technical Analysis. Interested in membership in CATA and the presentation? See:
https://canadianata.ca/content.aspx?page_id=0&club_id=71614
Remember Bre-X?
Interesting story from Mark Bunting and www.uncommonsenseinvestor.com
S&P 500 Momentum Barometers
The intermediate term Barometer plunged 7.00 to 16.20 yesterday. It remains Oversold. Trend remains down.
The long term Barometer dropped 2.00 to 24.20 yesterday. It remains Oversold. Trend remains down.
TSX Momentum Barometers
The intermediate term Barometer dropped 1.69 to 35.87 yesterday. It remains Oversold. Trend remains down.
The long term Barometer dropped 1.69 to 29.54 yesterday. It remains Oversold. Trend remains down.
Disclaimer: Seasonality ratings and technical ratings offered in this report and at
www.equityclock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed
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September 22nd, 2022 at 9:47 am
I’ve posted this before, and I’ll do it again, with detailed explanations to make sure we really understand this thing. This is the Dynamic Yield Curve page on StockChart at the bottom of this post. Look for the Yield curve Inversion, where the short-term rate is higher than the long-term rate. This “inversion” has been a predictor of Recessions 99% of the time since WW2.
There are two panels:
1) The first panel on the left, is the US Yield Fixed Income Chart, from Short Term 3 months yields, to 30 Yr., at the bottom horizontal. The vertical scale is from 0% to 6.97%, a high in yields that we haven’t seen since before the year 2000.
2) The second panel on the right, is the S&P 500, the benchmark for US equities, from about 1,000 to nearly 5,000 points over the past 20 years or so.
If you click on the Button named “ANIMATE” at the bottom left of the S&P 500 chart, it will animate and take you through the various yield curves over the past 20 years….This will take a few minutes. You can pause it, or refresh the page to take you back to square one.
You will note:
1) The Yield Curve Inverts in 2000, just before the Tech Bubble Crash of 2001-2002.
2) The Yield Curve Inverts in 2007, just before the 2008-2009 Great Recession Crash.
3) The Yield Curve Inverts in 2019, just before the 2020 COVID Pandemic Crash.
4) The Yield Curve Inverts, since early 2022, but very pronounced today…hard to miss the potential impact.
Therefore, logic dictates that we can expect a similar Recession Crash probably sometime soon, maybe even next year. In 2008 the S&P 500 corrected by 48% or so. I would expect a similar Crash. Why a crash? Because nobody believes it. Why? Because too many younger people have only known a Bull market where they have bought the “dips” since 2009, and made money. They expect this trend to continue. Plus, they have never seen interest rates above near zero in 14 years. It will be a shock, as they see this trend as temporary, which it is not. Powell has said so, but they don’t believe it.
The final moments of a Bear Market are always punctuated by what is known as a “Capitulation Low”, where everything is sold in desperation on high volume, after months of chronic grinding lower of the major indexes. This is the proverbial:” I can’t take any more, just get me out of stocks at any price” type of panic. Throwing the proverbial “baby with the bathwater” moment.
This what I am waiting for…..a great buying opportunity, it will be a wonderful gift, for those who are patient. At that point, hold no cash, borrow what you can at maximum and buy the best names. You will make several hundred percent in gains. I’ve done it many times before over the past 40 plus years of trading and investing. It is the one time, where it is as close to a sure thing as you can get in equities.
https://stockcharts.com/freecharts/yieldcurve.php
https://www.investopedia.com/articles/basics/06/invertedyieldcurve.asp
https://www.investopedia.com/terms/c/capitulation.asp
September 22nd, 2022 at 10:09 am
the AAII survey this week has the bulls down to 17.7% among the lowest ever in their history and the bears at 60.9% one of the five highest in their history….certainly hasn’t been working as a contrary indicator……..
September 22nd, 2022 at 1:07 pm
S&P 500-22 year Chart of Percentage of stocks above their respective 200 DMA….it’s been a lot worse and not as low as it can go. I expect to eventually see a similar drop as previously seen in 2002, 2008-9 or 2020.
https://stockcharts.com/h-sc/ui?s=%24SPXA200R&p=W&st=2000-09-22&id=p86664027867
September 22nd, 2022 at 1:24 pm
Bruce
Here is the Fear & Greed Index. It covers things well. Perhaps even with extremes in sentiment it’s just a little early for a major turn. I’ve often tracked something that seemed out of whack and find out a little ways down the road that it was just running late. There isn’t “Blood in the streets” yet and the Fear indicator isn’t cranked all the way over either. Need to see headlines of a crash front page too…………… everyone is still too complacent.
https://www.cnn.com/markets/fear-and-greed
September 22nd, 2022 at 1:44 pm
tnx Ron and Canuck
we still have Taiwan and Putin as potential wildcards that could precipitate a final washout….weekends are good times for nasty news to emerge…..
September 22nd, 2022 at 2:19 pm
Here is a Weekly 20 year chart of the $SPX. Price is still well above its long term uptrendline but with the line rising it is working its way to be touched again by the Index. Price now is getting close to the Weekly 200ema and while it does see price go through it briefly, price does tend to bounce back again each time as the chart shows. Plus that price point would also be a double bottom from the June lows. With the market so oversold and negative I would expect to see a bounce back soon from the 3600 level. Note the positive divergences on many oscillators along with all the negative sentiment. The selloff from its highs so far has been very mild. A break below 3600 would likely see a test of 3400.
https://stockcharts.com/h-sc/ui?s=%24SPX&p=W&yr=20&mn=0&dy=0&id=p39592374179&a=673066405
September 22nd, 2022 at 2:39 pm
Here is a 20 year chart of $GOLD with GDX and XGD.to overlaid. Unfortunately the currencies affect the price of the stocks but thought it was worth the effort to overlay them on the $GOLD chart. What is especially interesting is note the double bottom of $GOLD at 1675 on its wide price channel along with positive divergences on many oscillators. How to trade it is questionable.
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=D&yr=20&mn=0&dy=0&id=p12261610258&a=765264940
September 22nd, 2022 at 8:14 pm
VIX 20 year Chart….Compare 2007 to 2009, to 2018 to today….interesting. Of course we have the exogenous COVID freak -out moment in 2020, still it is fundamentally trending higher since 2018, not a positive thing for markets.
https://stockcharts.com/h-sc/ui?s=%24VIX&p=W&st=2000-09-22&id=p10708965503
September 23rd, 2022 at 6:47 am
Canuck 2004
That animation is so cool. Thanks so much for sharing!